Pedro Elías Hernández is a journalist and political analyst.
Guacamaya, November 11, 2025. We Venezuelans experienced a monetary reform starting in 1939 with the establishment of the Central Bank of Venezuela (BCV), which, from its inception until 1974 (when it became fully nationalized), operated as a semi-private institution, with private shareholders alongside the State. Before this, a Currency Law had been enacted in 1918, introducing the bolívar-gold as the official currency of the republic. This law stipulated that one bolívar was equal to 0.29 grams of fine gold; thus, the circulating bolívars had mandatory backing and were freely convertible into minted gold or gold bars. In effect, our nation was founded on a classic gold standard.
The gold backing our bolívars was held in the vaults of private banks, which, until the BCV’s creation, had the authority to issue primary money. Nevertheless, the bolívar-gold, as Venezuela’s monetary symbol, remained until 1974.
Due to the mentioned monetary reform, the gold owned by the nation’s commercial banks was expropriated, legal tender currency was issued, and Venezuelans were compelled to exchange their bolívars—previously issued by various private banking entities—for the BCV’s bolívar. This resulted in a single issuer of primary money, with very strict and precise emission rules, requiring the new bolívars to be backed by gold or foreign currency according to a fixed exchange rate. This strictness in currency emission led to an average annual inflation rate of less than 2% for over three decades in the country.
The system essentially established what is known as a “perfect currency board.” Currency was only issued if there was ample foreign currency or gold to support it. This model ensured that the money supply adjusted according to demand. It truly functioned effectively.
Sadly, over time, the monetary emission rules were loosened, allowing the BCV greater flexibility. This shift was solidified during Carlos Andrés Pérez’s first term with the nationalization of the Venezuelan issuing entity, which had been a semi-private institution since its establishment, comprised of numerous private shareholders.
That marked the end of the bolívar’s stability and strength as a currency. The tragic story of what transpired next with our national currency is well-known. The currency named after the Father of the Nation has been devalued to the point of obliteration. A genuine monetary parricide was committed. The real issue in Venezuela isn’t that people lack money, but rather that the money lacks value.
The Venezuelan tragedy lies in the disruption of a lengthy period of monetary stability and economic growth that spanned from 1922 to 1977. In that time, the Gross Domestic Product per Capita increased nearly five-fold, as highlighted by Professor Asdrúbal Baptista in his work, “Quantitative Bases of the Venezuelan Economy 1830-1989.”
What did we enjoy in Venezuela from 1922 until the mid-70s, a time when we grew at rates similar to today’s booming Asian economies? There were two crucial elements: a robust private oil industry and a stable, strong currency. Clearly, the pivotal change occurred with the oil nationalization in 1975. On one hand, the BCV’s primary money issuance rules softened, and on the other, our economy’s external sector was nationalized. Before, the dollars from Venezuelan exports were controlled by the private sector, both oil and non-oil, which sold to the BCV, and for the BCV to issue bolívars, there had to be backing in gold or foreign currency at a stable exchange rate—essentially managing a currency board.
Then, in the 21st century, we witnessed monetary reconversions, the infamous sequestration of the “little billion” from international reserves, and amendments to the BCV Law in 2005 and 2010, sealing the fate of our national monetary system.
To illustrate the asset confiscation we’ve endured, let’s look at 1960 when the daily salary for Venezuelans was 8 bolívars. This was roughly equivalent to 2.50 US dollars at the exchange rate back then. Now, that would translate to approximately 22 dollars of daily income. Labor organizations in the nation are demanding that worker salaries be increased to over 500 dollars per month. If this demand is met, the wages would barely align with what they were in 1960, indicating over six decades of economic stagnation.
In 1960, Venezuelan salaries were about 80% of an average worker’s income in the US. If today’s minimum wage in the US stands at around 1,800 dollars per month, then had we maintained the economic growth that characterized the first seven decades of the last century and preserved the strength of the bolívar, the minimum income for Venezuelans today should be roughly 1,300 dollars monthly, which is double the highest salaries in Latin America.
Another intriguing detail to remember is that one bolívar from 1960 was equivalent to 0.29 grams of fine gold. This indicates that, had our currency’s value been maintained, anchored to that precious metal, instead of paying more than 22,400,000,000,000,000 bolívars for one dollar today (after factoring in the 14 zeros removed through various reconversions), it would only be about 37 dollars to acquire one bolívar, based on today’s international gold price. This highlights the brutal destruction of our monetary symbol.
It is valuable to revisit Bolivarian doctrine, referencing a section from the Cartagena Manifesto outlining the monetary causes behind the fall of the First Republic:
“The squandering of public revenues on frivolous and detrimental expenditures; particularly on the salaries of numerous office workers, secretaries, judges, magistrates, legislators, and provincial and federal officials, dealt a fatal blow to the Republic, compelling it to resort to the dangerous expedient of establishing paper money, with no other assurance than the forces and imaginary revenues of the confederation. This new currency appeared, to many, a blatant violation of property rights, as they felt deprived of items of intrinsic value in exchange for objects with uncertain, even ideal worth. The paper money cemented the discontent of the foolish inland towns, which called upon the commander of the Spanish troops to come and free them from a currency they regarded with greater horror than servitude.”
It would be beneficial for monetary matters to progress towards a system where every citizen freely determines in which currency they wish to hold their wealth or which currency or valuable physical asset they prefer to use as money. This could lead to a competitive currency landscape, where many might opt for the dollar. We could also revert to a system akin to the one from 1918 to 1975, maintaining a national currency issued by our Central Bank, but with an anchor and support in foreign currency or a tangible asset like gold, benefiting from our vast gold reserves. Essentially, a new bolívar-gold. In the oil sector, we need to fully open it to both national and international private investment. The Venezuelan State shouldn’t act as a business owner; it does far too much of what it shouldn’t and very little of what it ought to.